Quest for Good Money: Past, Present and Future

This open-access book explores the history and functions of money, focusing on the role of a unit of account or denomination. It discusses the challenges of defining and deriving denominations for paper money and coins, as well as the potential for digital or cryptocurrency to be denomination-free. The book appeals to those interested in creating new digital or cryptocurrencies and serves as a textbook on central bank digital currency.

Format: Paperback / softback
Length: 151 pages
Publication date: 03 November 2022
Publisher: Springer Verlag, Singapore

This comprehensive open-access book delves into the intricate history and multifaceted role of money, a fundamental aspect of human civilization. Money is commonly understood to fulfill three interconnected functions: serving as a medium of exchange, a store of value, and a unit of account. While researchers often focus on the first two functions, the third function, the unit of account, tends to be overlooked. This book specifically aims to shed light on the definition and derivation of denominations within the monetary system, particularly in the context of paper money and coins.

In the case of paper money and coins, determining the denomination is a well-established process rooted in mathematical principles. The problem of the least number of weights, first proposed by Bâchet and later proven by Hardy and Wright in 1960, provides a framework for assigning denominations to these physical forms of money. This approach ensures that the weight of each coin or bill corresponds to its value, maintaining the integrity of the monetary system.

However, the advent of digital or cryptocurrency introduces a new dimension to the discussion of denominations. Unlike paper money and coins, digital or cryptocurrency operates on a decentralized network without the need for physical denominations. Digital wallets, which are essential for storing and transacting with cryptocurrencies, can hold any amount of currency without imposing upper or lower limits. This lack of denomination creates a unique characteristic known as decentralization or autonomy, as it allows individuals to transact without relying on centralized authorities or financial institutions.

When discussing stablecoins, which aim to maintain a stable price relative to a major legal tender, the concept of denomination becomes particularly relevant. Stablecoins take a unit of account or denomination of digital or cryptocurrency as given, effectively destroying the nature of decentralization or autonomy that is inherent to cryptocurrencies. This arrangement raises questions about the balance between centralized control and decentralized autonomy in the world of digital finance.

To address these challenges, this book offers a comprehensive exploration of the relationship between denominations and decentralization. It examines the historical development of money, the role of denominations in different monetary systems, and the implications of digital or cryptocurrency on the concept of denominations. By examining these topics, the book aims to provide insights into the future of money and the potential for new digital or cryptocurrencies to reshape the financial landscape.

Whether you are an enthusiast interested in creating new digital or cryptocurrencies, a researcher seeking to expand your knowledge in this field, or a policymaker exploring the implications of digital finance, this book will be an invaluable resource. It serves as a textbook on central bank digital currency, providing a comprehensive understanding of the technological, economic, and regulatory aspects of this emerging field.

In conclusion, this open-access book offers a comprehensive and insightful examination of the history and role of money, with a particular focus on the challenges and opportunities presented by digital or cryptocurrency. By exploring the relationship between denominations and decentralization, it provides valuable insights into the future of money and the potential for new digital or cryptocurrencies to reshape the financial landscape.

Weight: 267g
Dimension: 235 x 155 (mm)
ISBN-13: 9789811955938
Edition number: 1st ed. 2022